Written by Pieter Baert.
Simplification strategyAs highlighted in the recent reports by Mario Draghi and Enrico Letta, barriers to cross-border business operations continue to hinder the effective functioning of the EU single market. Removing such obstacles is not only central to the idea of the EU, but also represents an important opportunity for economic growth. In response, the European Commission has launched a broad initiative to ‘stress-test’ the entire EU rulebook to eliminate overlaps, contradictions, and unnecessary complexity. This agenda includes legislative simplification, for instance through a series of Omnibus proposals, and renewed efforts to deepen the single market. Among the options under consideration is the introduction of a ’28th regime’, to offer innovative companies a pan-European legal framework that companies can opt into.
In terms of taxation policy, the European Commission intends to table an omnibus package on taxation for the second quarter of 2026, and a recast of the Directive on Administrative Cooperation (DAC).
Costs, fragmentation and uncertaintyIn the context of cross-border activity, a tax obstacle can be understood broadly. It not only refers to explicit discrimination, but to any fiscal or administrative friction, such as: legal uncertainty; duplicative reporting requirements that disproportionately affect cross-border activity, as businesses must navigate multiple tax authorities; reporting systems; relief procedures; and divergent interpretations of the same EU rules. From an economic perspective, such barriers distort competition by favouring firms that remain domestic or that already operate at scale. They weaken the competitive pressure that the single market is meant to generate, with knock-on effects on prices, innovation, and market concentration. Empirical evidence further suggests a negative impact on investment decisions when businesses face uncertainty about the final tax treatment of an investment.
Any discussion of tax barriers must start from a fundamental legal and political reality: direct taxation remains largely within the competence of the Member States. Member States retain the right to determine who is taxed, on what, when, and at what rate, leaving the EU with a mandate to act only as necessary for the establishment and functioning of the internal market. These limited legal pathways for the EU result in distinct national tax environments, compelling cross-border workers and businesses to navigate different tax rulebooks including those governing labour income, corporate income, and capital gains. Attempts at harmonisation are long-standing: the idea of a common corporate tax base has been discussed since the 1960s. However, successive proposals failed to secure sufficient support, and the most recent proposal – BEFIT – is pending in the Council since 2023.
Even in areas where EU law provides a common framework, tax barriers can remain pervasive. For instance, despite the existence of the VAT Directive, value added tax (VAT) was identified as the most frequently reported tax-related obstacle in the single market in the Commission’s 2025 Single Market and Competitiveness Report. A particularly acute problem is VAT registration in another Member State. While the underlying VAT concepts are largely harmonised, administrative procedures are not. Registration procedures can vary widely between Member States in terms of documentation requirements, digitalisation, and processing times (see Table 1). The forthcoming expansion of the VAT One-Stop Shop under the VAT in the digital age package will significantly lower the need for multiple VAT registrations. However, where a company carries out activities outside the scope of the One-Stop Shop or where timely recovery of input VAT is commercially critical, companies may still need, or choose, to obtain VAT registrations in several Member States, each subject to national administrative procedures and compliance burdens.
Table 1 VAT registration challenges VAT registrationRegistrationVAT rules may be particularly complex: suppliers may not be aware that they must register for VAT in another country, leading to unintentional non-compliance, disputes and loss of tax revenue.DocumentationDifferent Member States may request different supporting documents (originals/copies) during the registration process (invoices, company statutes, company directors’ identity, etc.).LanguageLanguage barriers can hinder communication for foreign traders. Authorities may require documents in the local language, requiring professional translation.Nature of processDegree of digitalisation varies between Member States; manual procedures, delays and inconsistent follow-up increase uncertainty.ReportingOnce registered, the business must file VAT returns, EC-sales listings, etc.PaymentsOnce registered, the business must remit VAT according to local deadlines.Tax adviceComplexity of registration and subsequent obligations may force businesses to rely on external tax and accountancy expertise.Table Source: P. Baert, Single market, single VAT registration? Development and future of the one-stop shop, EPRS, European Parliament, 2025
More broadly, the unanimity requirement in tax matters represents a high barrier to achieving legislative progress at EU level. As a result, directives — rather than directly applicable regulations — remain the default legislative instrument. This inevitably leaves room for divergent national transposition and application. In response, the EU has increasingly relied on coordination and soft-law instruments, including guidance issued by the VAT Committee, recommendations and initiatives such as the European Trust and Cooperation Approach (ETACA) framework, to mitigate fragmentation.
New challengesAs the economy evolves, new tax barriers are emerging. Digitalisation has enabled employees to work from anywhere, but where an employee resides in one Member State and works for an employer established in another, overlapping national rules can lead to double taxation, disputes and high compliance costs. Employers may also face a ‘permanent establishment’ risk if an employee’s home office is deemed to create a taxable presence in another jurisdiction. These risks act as hidden barriers to labour mobility within the single market. The Commission plans to propose a recommendation to Member States on this issue in 2026.
The increased ‘servitisation’ of the EU economy presents a further challenge for the single market, as new business models combine elements of both goods and services (e.g. subscription-based manufacturing models). Current VAT rules, however, continue to rely on a rigid distinction between supplies of goods and supplies of services, each with different place of taxation rules. In hybrid scenarios, this can create legal uncertainty and disputes between Member States over taxing rights, increasing compliance costs and litigation risks for businesses.
Read this ‘at a glance’ note on ‘Tax obstacles in the single market‘ in the Think Tank pages of the European Parliament.
Injured civilians, having escaped the raging inferno, gathered on a pavement west of Miyuki-bashi in Hiroshima, Japan, at about 11 a.m. on 6 August 1945. Credit: UN Photo/Yoshito Matsushige
On the 80th anniversary, which was commemorated in August 2025, Izumi Nakamitsu, UN High Representative for Disarmament Affairs, said: “We remember those who perished. We stand with the families who carry their memory,” as she delivered the UN Secretary-General's message.
She paid tribute to the hibakusha – the term for those who survived Hiroshima and the atomic bombing of Nagasaki – “whose voices have become a moral force for peace. While their numbers grow smaller each year, their testimony — and their eternal message of peace — will never leave us,” she said.
By Thalif Deen
UNITED NATIONS, Jan 23 2026 (IPS)
The two current ongoing conflicts, which have claimed the lives of hundreds and thousands of people, are between nuclear and non-nuclear states: Russia vs Ukraine and Israel vs Palestine, while some of the potential nuclear vs non-nuclear conflicts include China vs Taiwan, North Korea vs South Korea and US vs Iran (Venezuela, Mexico, Colombia, Cuba and Denmark).
The growing list now includes another potential conflict: nuclear China vs non-nuclear Japan, the world’s only country devastated by US atomic bombs on Hiroshima and Nagasaki in August 1945 which killed over 150,00 to 246,000, mostly civilians.
A statement last month by Japan’s Prime Minister Sanae Takaichi warned that her country could intervene militarily if China were to attack Taiwan—a statement that has the potential for a new conflict in Asia.
According to the New York Times, Beijing has “responded furiously” asserting that self-governing Taiwan is an integral part of Chinese territory. The government has also urged millions of tourists to avoid Japan, has restricted seafood imports and increased military patrols.
Meanwhile, amidst rising military tension, the Japanese government has called for a snap general election on February 8, to seek a fresh public mandate for the new administration.
In an article titled “An Anxious Nation Restarts One of its Biggest Nuclear Plants”, the Times said January 22 that “Tokyo Electric Power (TEPCO)—the same utility that operated the Fukushima plant—has restarted the first reactor, Unit 6, at its Kashiwazaki-Kariwa complex, one of the world’s largest nuclear facilities”.
Before 2011, nuclear power provided about 30 percent of Japan’s electricity, the Times pointed out.
According to the Stockholm Peace Research Institute, Japan’s military budget in 2024 had grown to the 10th largest in the world. China’s military budget has also been growing, in 2024 being second only to that of the United States.
Jackie Cabasso, Executive Director, Western States Legal Foundation, Oakland, California, and North American Coordinator for “Mayors for Peace”, told IPS Prime Minister Sanae Takaichi’s recent statement that an armed attack on Taiwan by China could constitute an “existential threat” to Japan, is very worrying indeed.
In 1967, she said, Japan’s then-Prime Minister Eisaku introduced the Three Non-Nuclear Principles of not possessing, not producing, and not permitting the introduction of nuclear weapons, and they were adopted by a formal resolution of the Diet in 1971.
“However, Japan’s commitment to these Principles has been called into question over the years, and it is widely believed that Japan has the capability to rapidly produce nuclear weapons, should the decision be made to do so.”
Beijing is ratcheting up the rhetorical heat. Whether true or not, a recent report by the China Arms Control and Disarmament Association and the Nuclear Strategic Planning Research Institute, a think tank affiliated with the China National Nuclear Corporation, alleges that Japan is engaged in a secret nuclear weapons program, and poses a serious threat to world peace. Meanwhile, China is rapidly modernizing and increasing the size of its own nuclear arsenal, said Cabasso.
“Japan, as the only country in the world to have experienced the use of nuclear weapons in war, has the unique moral standing to be a champion for dialogue and diplomacy, peace, and nuclear disarmament”.
Japan and China’s leadership – and for that matter, all world leaders – should listen to the Mayors of Hiroshima and Nagasaki who on January 20 issued a Joint Appeal on behalf of the 8,560 members of Mayors for Peace in 166 countries and territories, declaring, “We urge all policymakers to make every possible diplomatic effort to pursue the peaceful resolution of conflicts through dialogue and to take concrete steps toward the realization of a peaceful world free from nuclear weapons.”
Dr M.V. Ramana, Professor and Simons Chair in Disarmament, Global and Human Security and Director pro tem, School of Public Policy and Global Affairs at the University of British Columbia, Vancouver, told IPS even without nuclear weapons being utilized, the use of military force in Taiwan would be disastrous for global security, and especially for the people of Taiwan.
“Any resolution of the dispute over Taiwan should follow two fundamental principles: it should be settled through dialogue and discussion, and it should prioritize the wishes of the inhabitants of Taiwan. Finally, all parties should avoid provocative remarks,” he declared.
The new developing story also figured at a recent UN press briefing.
Question: We know that there is a long-standing policy of Japan, which called three non-nuclear principles, which basically said that Japan shall neither possess nor manufacture nuclear weapons nor shall it permit their introduction into Japanese territory. But currently, the Japanese Government is under a discussion of revision of some of those security documents, including this policy, which draws quite anger from people from Hiroshima and Nagasaki and some of the Nobel Peace Prize winners. What’s the position of the UN .…?
UN Spokesperson Stephane Dujarric: Look, I think the Secretary-General’s position on denuclearization, has been clear and he stated it a number of times. Obviously, Member States will set whatever policy they wish to set. What is important for us is that the current tensions between the People’s Republic of China and Japan be dealt through dialogue so as to lower the tensions that we’re currently seeing… I think the Secretary-General’s position on denuclearization and non-proliferation is well known and has been unchanged.
At a party leaders’ debate last November, Tetsuo Saito, representative of New Komei Party, which was founded in 1964 by Dr Daisaku Ikeda, leader of Japan’s Soka Gakkai Buddhist movement, questioned Prime Minister Sanae Takaichi in the Diet about the government’s stance on the Three Non-Nuclear Principles and Japan’s security policy.
He criticized remarks by a senior government official suggesting Japan should possess nuclear weapons, calling them contrary to Japan’s post-war policy and damaging to diplomatic and security efforts.
He emphasized that the principles — not to possess, not to produce, and not to permit nuclear weapons on Japanese soil — and Japan’s obligations under the Nuclear Non-Proliferation Treaty are fundamental and must remain unassailable.
https://www.komei.or.jp/en/news/detail/20251220_28996?utm_source=chatgpt.com
https://www.komei.or.jp/komeinews/p465453/?utm_source=chatgpt.com (In Japanese)
https://www.komei.or.jp/en/news/detail/20251127_28982?utm_source=chatgpt.com
Elaborating further, Cabasso said given Japan’s brutal invasion of China during World War II and China’s growing threats to reclaim Taiwan, dangerous long-simmering tensions between the two countries have reemerged. In an increasingly unstable and unpredictable geopolitical world, Japan and China’s war of words is a train wreck waiting to happen.
Article 9 of Japan’s 1947 Peace Constitution, imposed on Japan by the United States in an act of victor’s justice, states, “the Japanese people forever renounce war as a sovereign right and the threat of use of force as means of settling disputes,” and armed forces “will never be maintained.”
However, these provisions have been eroding in the 21st century, with Japan in 2004 sending its Self-Defense Forces out of area – to Iraq – for the first time since World War II. And in 2014, then-Prime Minister Shinzo Abe reinterpreted Article 9, allowing Japan to engage in military action if one of its allies were to be attacked.
The following year, she pointed out, the Japanese Diet enacted a series of laws allowing the Self-Defense Forces to provide material support to allies engaged in combat internationally in an “existential crisis situation” for Japan. The justification was that failing to defend or support an ally would weaken alliances and endanger Japan.
References
Japan Secretly Building Nukes, Could Go Nuclear Overnight Under Takaichi’s Policy Shift, Chinese Report Claims
https://www.eurasiantimes.com/japan-secretly-building-nukes-could-go-nuclear/
Mayors for Peace Joint Appeal, January 20, 2026
https://www.mayorsforpeace.org/en/
This article is brought to you by IPS NORAM, in collaboration with INPS Japan and Soka Gakkai International, in consultative status with the UN’s Economic and Social Council (ECOSOC).
IPS UN Bureau Report
Follow @IPSNewsUNBureau
La Moldavie continue de prendre ses distances avec la Russie en quittant officiellement la Communauté des États indépendants le mois prochain et continue de clamer son intention de rejoindre l'Union européenne à partir de 2028.
- Articles / Moldavie, Politique, Questions européennes, Courrier des Balkans, Moldavie Russie UE, Une - Diaporama, Une - Diaporama - En premier